The “Top Questions from our Clients” publication is a monthly periodical that posits the most important questions,  answers, and portfolio implications curated from across different regions. The August edition addresses the below topics:

• Question 1: With S&P500 at record levels, what are the opportunities/risks for further growth? Resilient US equity earnings, broadening momentum and optimism around supportive fiscal policies have buoyed the S&P500 rally, but the risks from rising fiscal debt and likely tariff-induced inflation can cause volatility. We do see several catalysts for further upside from here: the “One Big Beautiful Bill” should incentivise capital investments, while permanent tax cuts and rising real incomes should support consumers. Upside surprises during the 2Q earning season should continue (we’re only half-way through) and likely rate cuts from the Fed in H2 should be accretive to earnings too. So, we maintain our US equity overweight and focus on trends around AI, automation and reshoring. We acknowledge the risks and diversify our equity exposure to other opportunities in Asia, while adding high quality bonds and alternatives with an active approach
• Question 2: What opportunities can arise from the reorientation of supply chains in Asia? Since the tariff announcements, supply chains in Asia have faced disruptions, with many corporates delaying their investment decisions. But the recent trade deals by a few Asian countries have improved sentiment, although final tariff structures (both country-specific and sectoral) remain unclear. Despite this uncertainty, many Asian economies offer significantly lower labour costs compared to the US and a robust manufacturing ecosystem. Thus, even if US reshoring pressures rise, it may still be more economical for many companies to continue manufacturing in Asia and absorb the tariffs. We continue to diversify our exposure within Asia with overweights on Chinese, Indian and Singaporean equities which stand to benefit from resilient economic growth, large domestic markets, costs competitiveness, skilled labour and easing policy rates.
• Question 3: Do we still hedge USD, and can it rebound? FX diversification remains crucial to navigate current market uncertainties. The dollar rebound we saw in July suggests USD may have found a floor, but more stars need to align to make this bounce sustainable. We believe USD needs 1) to regain its safe haven allure 2) US fiscal outlook to improve 3) clarity around trade policies and 4) investors to regain confidence in traditional drivers like yields and investment flows for a sustainable bounce from here. But amid uncertainties, we continue to diversify our FX exposure and believe euro and gold are the markets’ and central banks’ favourite alternatives, while JPY and CHF can be good candidates as a safe haven currency
• Question 4:  Do we see opportunities in Europe to diversify outside of the US? Yes, but only selectively. While European equities have lagged recently, we believe long-term structural flows like regional diversification and repatriation should continue to support the market. Also, “certainty” from the recent US-EU trade deal should help stabilise sentiment or a bottoming out in tariff-exposed sectors. Overall, we maintain a neutral stance on European equities due to lacklustre earnings growth, and a strong euro weighing on earnings. However, we like sectoral opportunities in Industrial and Utilities—which include beneficiaries from defence and infrastructure spending plans; and Financials—which benefits from improving future earnings expectations, the steeper yield curve, easing regulatory restrictions and consolidation in the sector
• Question 5: Can uncertainties around tariffs and deregulation impede US equity growth? Tariff uncertainties linger as we are yet to see where the exact numbers for many country and sector tariffs will land. Amid that lack of clarity, many corporates have been delaying their investment decisions. Additionally, the exact impact of tariffs on corporate margins and inflation is yet to be seen. But the recent deals with Japan and the EU should reduce some uncertainty and the promised deregulation should create more jobs and wealth, especially in Financial, Healthcare, Technology, and Energy sectors, though the exact implementation plan is yet to be seen. Furthermore, the reshoring trend should also bring more investments to the US, which can help reduce the deficit from tax cuts. We look for large cap companies with long-term growth opportunities with strong domestic supply chains, pricing power, and flexibility to benefit from capital investment incentives
• Question 6: Where do we see attractive opportunities in mainland Chinese and Hong Kong equities? While we were not expecting any bazooka-sized stimulus from the July Politburo meeting, the policymakers’ focus on stimulating growth and tech independence, while addressing the structural challenges of excessive price competition and overcapacity problems support our positive stance. We are mildly overweight on Chinese equities, which remain attractively valued and prefer domestically focused sectors and leaders in AI innovation, mass consumption, and quality SOEs paying high dividends. Hong Kong markets had a strong start to 2025, supported by strong inflows and IPO activity. But given the lack of clear evidence of sustainable improvement of the local economy, the budget deficits and corporate earnings, we maintain a neutral stance, and prefer tactical opportunities among undervalued stocks across banks, insurance, telecom, and utilities